Auto Insurance Reform – Michigan July 2020

Michigan is moving into a new era in Auto Insurance.  Since the mid 70’s, Michigan has been a No-Fault State and even after the reform we will still be considered to be No-Fault.

Insureds are going to more responsible for there action then ever before.  With the new changes insureds will now be able to sue and get sued for Medical expenses as well as attendant care, wage loss, and replacement services, all of which are covered under PIP.  Michigan insureds will be able to choose what limit of medical (PIP) coverage they think they need.  Anything over that limit will either go to your Health Insurance or you will have to sue the At-Fault party for the rest.

PIP (Medical) Options:

These options are copied directly from the State DIFS (Dept of Insurance and Financial Services) new forms.

Option 1: Unlimited Coverage
This option provides the most coverage. It will pay for all allowable expenses for your care, recovery, and rehabilitation
if you are injured in an auto accident.
Risks: The premiums for this option are higher than premiums for other options.
Benefits: PIP medical will cover costs that may not be covered by health insurance, such as rehabilitation and
attendant care.  This choice will significantly limit the risk that you will have out-of-pocket costs for your care.

Option 2: Limited Coverage of $500,000 OR
Option 3: Limited Coverage of $250,000
If you choose one of these limits, this amount is the most your auto insurance company will pay per person per accident
for an injured person’s expenses under PIP medical coverage.
Risks Limited PIP medical coverages may not be enough to cover your medical expenses. If your PIP
medical limit is reached, you may need to rely on other health coverage, which may not cover all
medical, rehabilitation or attendant care costs. If you do not have other health coverage, you may be
personally responsible for paying these expenses.
Benefits Lower coverage limits have less expensive premiums than plans with higher or unlimited PIP medical
coverage.  Up to the limit chosen, PIP medical will cover the cost of products and services that may not be
covered by health insurance, such as rehabilitation and attendant care.

Option 4: Limited Coverage of $250,000, with some or all persons excluded from PIP medical
This option is only available if you choose the $250,000 PIP medical limit.
You may select this option if both of the following are true:
 The applicant or named insured has qualified health coverage that is not Medicare; AND
 Each spouse or resident relative excluded from PIP medical has qualified health coverage.
Anyone who is excluded will not have PIP medical coverage. Anyone who is not excluded will have $250,000 in PIP
medical coverage.
Risks ANYONE YOU EXCLUDE WILL NOT HAVE PIP MEDICAL COVERAGE.
In addition:
 Persons relying on qualified health coverage to pay for auto accident injuries should be
aware that, unlike auto insurance, health insurance stops paying when the policy ends or is
canceled.
 If any excluded person loses qualified health coverage, you must notify your insurer within
30 days of loss of coverage.
 Within 30 days of losing qualified health coverage, if an excluded person is injured in an
auto accident, coverage will be provided by the Michigan Assigned Claims Plan if they
have no other qualified health coverage or PIP medical coverage.
 A person who has not obtained qualified health coverage or PIP medical coverage within
30 days of the loss of coverage will not be entitled to any PIP medical benefits.
NOTE:  This coverage is only available to those who are not excluded from PIP medical
coverage. Check with your agent or company for additional information.
Benefits You will pay a reduced premium because you will not be charged a premium for PIP medical
coverage for anyone who is excluded.

Option 5: Limited Coverage of $50,000
If you choose this limit, $50,000 is the most your auto insurance company will pay per person per accident for an
injured person’s expenses under PIP medical coverage.
You may select this option if:
 The applicant or named insured is enrolled in Medicaid; AND
 Any spouse and all resident relatives have one of the following:
a) qualified health coverage;
b) Medicaid enrollment, or
c) coverage under another auto policy with PIP medical coverage.
Risks Limited PIP medical coverages may not be enough to cover the cost of your medical care. If your
PIP medical limit is reached, you may need to rely on other health coverage, which may not cover all
medical, rehabilitation, or attendant care costs. If you do not have other health coverage, you may
be personally responsible for paying these expenses.
Benefits Lower coverage limits have less expensive premiums than plans with higher or unlimited PIP
medical coverage. Up to the limit chosen, PIP medical will cover the cost of products and services that may not be
covered by health insurance, such as rehabilitation and attendant care.

Option 6: No PIP medical coverage for anyone covered by this policy
You may select this option if:
 The applicant or named insured has coverage under both Medicare Parts A and B, AND
 Any spouse and all resident relatives covered by the policy have qualified health coverage or are covered
under another auto policy with PIP medical coverage.
Risks NO PIP MEDICAL COVERAGE WILL BE PROVIDED UNDER YOUR POLICY.
You and any other persons covered by this policy will not have PIP medical coverage. You and
those persons may have to rely on other health coverage to pay for medical expenses resulting from
an auto accident, which may not cover all products and services that PIP medical provides.
 Persons relying on qualified health coverage to pay for auto accident injuries should be
aware that, unlike auto insurance, health insurance stops paying when the policy ends or is
canceled.
 If anyone covered by the policy loses qualified health coverage, you must notify your
insurer within 30 days of loss of the coverage.
 Within the 30 days of losing qualified health coverage, if anyone covered by the policy is
injured in an auto accident, coverage will be provided by the Michigan Assigned Claims
Plan if they have no other qualified health coverage or PIP medical coverage.
 A person who has not obtained qualified health coverage or PIP medical coverage within
30 days of the loss of coverage will not be entitled to any PIP medical benefits.
Benefits You will pay a reduced premium because your policy will not be charged a premium for PIP medical
coverage.

Section B: PIP Medical Coverage Options and Certification
Make your selection carefully because the choice you make will have financial consequences. If you choose
more than one option, your insurer will provide you with the option that has the highest level of benefits and will charge
the appropriate premium for that option.

Notes on PIP: Customers that choose not to take Unlimited PIP will have to sign a form every year to keep the coverage they asked for.  If the form isn’t signed or recieved the coverage and premium will automatically increase to the unlimited.

 

More changes:

Along with the above options there are going to be many other changes to Michigan No Fault.  Including a decrease in the MCCA and PIP premiums.  Most companies due to the higher risk of lawsuits will be increasing the Liability premiums along with the uninsured and underinsured motorist premiums.

The state is going to be implementing a Fee Schedule in 2021 for hospitals so that they can’t over charge someone in a auto accident.

New fraud department will be put in force.  Which will be funded by consumers.

Minimum required state minimum Liability is also increasing from 20/40 to 50/100 and you will have to sign off on a annual basis to keep anything below the 250/500 limit.  250/500 will be the new state standard, personally i still think this is to low but at least it is in the right direction.

 

Question we get most?

The question we get most is, will this new reform actually decrease our premiums.  The answer is, it depends.  Depending on what limits you take/need on the medical and what Liability coverages you need. (which will be at least double what you currently need)

It will most likely just move premium around.  It will decrease auto insurance but increase the amount of Liability and Uninsured/underinsured Motorist everyone needs to have.  If you want to be covered correctly then the answer will be a little if any at all in my opinion.  Until everything is settled no one really knows.

Things are changing on a daily basis and until it actually goes live 07/02/2020 we won’t be absolute on anything.  I will keep updating our customers as I get more information.  If you would like to talk with us please give us a call.